DomainState.com is Walking on Dangerous Turf
It’s no secret that DomainState.com is for sale and has been a hot topic within the domaining community since it was put up for sale approximately 1 week ago. After 2 days of receiving interest and offers, they sent out an email to the people who have shown interest in the website stating the they have decided to sell the website through an auction. Reported earlier today by ChefPatrick.com, DomainState.com decided to cancel the auction and continue taking offers after receiving a $20,000 offer from one of the three owners.
For one of the owner’s to put in a $20,000 offer for the website at this point in the sale isn’t really fair to other potential buyers. From an ethical standpoint, had the owner seriously been considering placing a $20,000 offer on the table, DomainState.com should’ve waited until he decided for or against it.
And to make matters worse, the owner knew what others were offering, so he was able to base his offer off of that. That’s information that other potential buyers did not have. To put it simply, it’s completely unethical.
Whether the owner’s offer is legitimate or not, I cannot say. Chances are it is a legitimate offer, but I would say a better question is, was it DomainState.com’s plan from the beginning to tell potential buyers about the $20,000 offer this late into the game, or were the other 2 owners not aware of the third owner considering placing a $20,000 offer until now. I can tell you that if the owner truly did put a $20,000 offer on DomainState.com, he’d really only be paying about $13,333 because he’ll get a 1/3 cut of whatever the website sells for. So they’re putting the pressure on bidders to make an offer higher than $20,000, when really the offer is only about $13,333. One good thing that can come from this is that this tells bidders that there most likely isn’t a bid above $13,333.
My main point here is that when a website is involved in this type of sketchy, unethical activity, it’s most likely going to lose a lot of interest and potential buyers. In my opinion, I would feel like I’m walking on dangerous turf dealing with these owners given the circumstances. Is it fair to not only change the type of sale twice, but for the owner, who can see the offers that were coming in, to make an offer at that point? I look forward to your comments.
This is the classic response on ChefPatrick.com:
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Comment by Snoopy Subscribed to comments via email
2010-01-12 21:23:57
“Why didn’t you just purchase the forum in the first place?”
My viewpoint has changed over the last week after alot of thinking, things aren’t always 20/20.
@Tia – I got a laugh out of your comment. Not many people can get a laugh out of me at midnight
Chef would’ve made a good owner, but who knows whether there will be a new owner with this sketchy activity.
What does it matter? It’s worth exactly what the final sales price is; if someone is willing to put in a higher offer of $21,000 then that’s the final sale price. If no-one puts in a higher offer then they either sell to the owner who put in a $20k offer, or they hold it. The actual order of events doesn’t affect the final sales price in the slightest. The sale is simple: either you can afford to buy it or you can’t.
Sure, the guy who put in the $20k offer knows what the other bids are – after all, he owns the site – why shouldn’t he know? Even if they get a $50k offer, they can still choose to sell it to him for 10 cents and a blowjob if they wish. It’s their prerogative to do what they like with their own property.
@Chris – “”…they can still choose to sell it to him for 10 cents and a blowjob if they wish. It’s their prerogative to do what they like with their own property.”"
BINGO!
Funny all the armchair ‘theories’ out there, of what they ‘should/shouldn’t’ do, to sell ‘their’ site! good grief.
@Kevin – While they are big boys and they can make their own decisions, my point is the decisions they’re making and actions they’re taking in this deal are unethical. If a person wants to do something unethical, so be it. I’m just bringing up the point that what they’re doing unethical in the business world.
@Chris – Similar to what I said to Kevin, the real thing to keep in mind here is their unethical actions. They most likely knew that the third owner was considering making a $20,000 offer on the site before putting it up for sale, because a $20,000 offer for a website isn’t something that come’s to one’s mind at any given moment. It takes a lot of thinking and evaluating. Assuming this was the case, they acted unethically because of 2 things.
1) If the owner is going to be a potential buyer, he should be treated like one, and have only the knowledge that other potential buyers have.
2) They’re putting pressure on people to put in offers over $20,000, when the truth of the matter is, the really offer is $13,333. They’re being very misleading.
Keeping these points in mind, I think it’d only fair to say DomainState.com acted unethically.
There’s nothing unethical about it.
@Sam – The thing is Sam, as you note, – “Assuming”!!!
They didn’t have to say anything about any (insider??) offer, and let it play-out with some made-up number to justify who they’d end up selling it to. So why would they bother? Having been a member of that forum since it’s inception, I highly doubt it was so others could/would second guess their ‘motives’!
Basically, to make conjecture over ‘assumptions’, seems to have a bitterness in it. IMO.
Sam, the problem here is that their “unethical actions” are entirely in your mind. You miss the point – it’s their property to do with as they please.
Particularly regarding your point #2 – they’re not putting ANY pressure on you to put in an offer over $20,000. You can still put in an offer of $13,333 if you wish to do so. They may or may not accept it, but if you don’t want to put in an offer of $21,000 then don’t; no-one is forcing you to do anything.
Assuming they’ll take the highest offer, then so what if they already knew they had an offer of $20k on the table? If you had offered $13k at any point in time, THEY’D HAVE DECLINED IT. If you don’t have $21k or more you were NEVER GOING TO OWN IT.
Any way you want to cut it, there’s only an imaginary world inside your head in which you could buy it for $13k.
It was the best way to get a market valuation for the site. Perhaps the owners couldn’t decide on a valuation between themselves?
In the event that the one of the owners doesn’t win the auction, then it will serve the purpose of driving up the eventual sales price … but tbh this stuff happens in auctions all the time – without being made clear to other participants.
I don’t necessarily agree with your comment that the $20k offer would take a lot of thinking and evaluating for someone who understood the business vis a vis someone from the outside who needs to do their due diligence. I do agree the crux of the ethical question hinges on whether this was premeditated – but in any event I tend to agree that they are entitled to do what they want. Albeit with the result that they may suffer some reputational damage.
There has beeen a lot of crying done about this matter and its quite annoying its their site their rules snoopy is the is one of the few people i would like to see own it so regardless of what he has to pay.
( which I think its fair)
if you cant afford it STFU you dont matter
and Stuff happens climb down off your self-righteous high horse and get over it
btw nice rehash of what was already said somewhere else here snoopy has explained he is only buying the other 2/3 of the site its not rocket science any body else would have to buy 3/3
Business as usual for some folks.
They just did not disclose the reserve price US $20’000.
Reasons: Setting a reserve price would have brought the higher bids to that range.
Why Tell Now? :The owners minimum expectation not met.
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Forums are a pain in the rear and almost impossible to monetize.
Spammers pepper your forum with hardcore p0rn and irrelevant ads, and keeping up with them is practically a full time job, not to mention the hacking in…
Then there are the sicko-wacko trolls who live to spread their vitriol.
No thanks. Been there, done that.
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Everyone brings up good, valid points. This is a very opinionated article. Everybody is clearly going to have their own opinion. I found all of the comments received very interesting.
I do want to clarify, I was never a potential buyer for the DomainState.com forum. I’m not whining, I’m simply making the point that people need to learn business ethics and follow them. In my opinion, the actions taken were unethical. You might have a differing opinion. That’s what’s so great about blogs and blogging. You get to hear everybody’s point of view.
I didn’t see a problem in the way they went about going through with selling the site. It’s not unethical. It’s just another business transaction. Chris Beach explained it best.
@Marcus – Appreciate your comment. For the reasons I’ve talked about in my article and conveyed in these comments, I believe they are unethical. Especially with ethical issues, everybody can have another opinion. If I haven’t convinced you that DomainState.com went about their sale unethically, that’s what comments are for. Thanks for your comment.
@Sam – Interesting response – “”If I haven’t ‘convinced’ you that DomainState.com went about their sale unethically, that’s what comments are for.”"
Be curious to know ‘why’ you feel you need to ‘convince’ others to your ‘assumptions’ that something is unethical!
Wouldn’t ‘proof’ do that??? (or is that an inconvienence for false conjecture?)
@Kevin – I don’t feel as though I need to convince anyone. I’m stating an opinion. Often times, bloggers can sway their readers to believe what they do, and sometimes they can’t. But the truth of the matter is, bloggers don’t really care whether you agree with them or not. Instead, we just want to hear your point, and your reasoning as to why you agree or disagree.
You are right, I am speculating. That’s part of blogging. How do you think theories are invented? They don’t just pop up. So many things can be speculated online, and that’s one of the points of blogging. For example, I’m sure you’re aware of the Halvarez scandal that took place a short time ago. There were dozens of blogs speculating what happened and their theories as to why. There were also dozens of blogs who just reported the news. Personally, I don’t think that blogs with just news updates about the Halvarez scandals are interesting. When you hear others speculate and form opinions, it makes you think. That’s one of the most important points of blogging, making the reader think and respond.
I got a good laugh with the comment that said his point was that it is unethical in the business world is all …. IMHO – There isn’t a single ethical point available in the “Business World” anymore. That is funny stuff there. Thanks! Business is full of greed, lust, unethical decisions every single day. I say yea the owners should do whatever they want with the site. Everybody else in this world wouldn’t hesitate to do the same if they thought for a second they will profit. Prove me wrong!